All posts tagged buyback

General Motors Co. Chief Financial Officer Chuck Stevens said investors shouldn’t expect the current $5 billion share buyback as the end of its repurchase plans.
In a conference call Thursday to discuss first-quarter earnings, Mr. Stevens said the current buyback–initiated in March in response to activist shareholder pressure–should be seen as “an initial buyback,” or the first tranche in a series of actions. A group of investment funds, led by former hedge fund manager Harry Wilson, initially asked for $8 billion in buybacks, but settled for $5 billion after discussions with GM’s management team. Read More »

On the plus side, more profit. On the minus, it’s been more than two years since IBM’s revenues grew. And as a special bonus, the company hit a new milestone in its long-running mission to buy back its shares.

Via the WSJ’s Tess Stynes and Don Clark:

International Business Machines Corp. said its second-quarter earnings climbed 28%, helped by restructuring moves, although the computing and tech giant also reported its ninth consecutive quarter of lower revenue.

IBM showed signs of improvement in its long-struggling mainframe computer business. But revenue from another key line of server systems continued to slump, while IBM’s software and services businesses didn’t grow as much as some analysts expected.

The hardware business of IBM is in an even longer slump. More on this after the jump… Read More »

Here’s a quick lesson in how to enrage your adversaries, courtesy of America’s leading airplane manufacturer.

Boeing has had a famously rocky relationship with its biggest union in recent years, and it got even more strained last month when the International Association of Machinists and Aerospace Workers voted to reject an offer that would extend their existing contract from 2016 to 2024.

The union is pushing back hard against Boeing’s insistence on changes to the pension plan and pay scale, with the company saying the changes are needed to keep the unionized workforce in Washington state competitive with other potential manufacturing locations. Boeing has relented on the wage structure, but the union’s leadership wasn’t swayed.

So amid tricky negotiations to convince its union of the need for cutbacks in labor costs, how to send the right corporate message?

But for now, here’s one thing that sticks out: the company will buy the car back from lessees for a guaranteed value, but will the upstart company have the money to do that? Not to worry. Founder and billionaire Elon Musk is personally guaranteeing the buyback, presumably putting some portion of his own personal fortune down as security in case his company comes up short.

From Tesla’s site, emphasis ours:

“After 36 months, you have the right, but not the obligation to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S Class, one of the finest premium sedans in the world, made by Daimler (also a Tesla partner and investor).

Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing.”

While GE’s friendliness to buybacks is nothing new, its announcement today comes as plenty of others are joining the party. After years of heavy cost cutting and low investment, corporate America’s cash reserves have ballooned to an estimated $1.26 trillion. In the absence better ways to spend that cash, handing some of it back to shareholders through dividends or buybacks is becoming more popular.